In January of this year, StockX (an online trainer reseller) launched “Vault NFTs”. NFTs, represented by images of Nike shoes, can be traded digitally or redeemed for the corresponding physical trainers. NFTs have also enabled customers to access experiences such as releases, promotions and events.
Nike has since filed a lawsuit against StockX for trademark infringement, claiming that StockX was selling NFTs of Nike sneaker images without Nike’s permission, alleging it infringed on its trademarks and confused customers. Nike claimed that StockX was “blatantly freeriding” on “the back of Nike’s famous brands and associated goodwill”.
StockX responded to the claim on March 31, calling Nike’s lawsuit “baseless and misleading.” StockX said its NFTs are merely “tickets” to represent proof of ownership of physical trainers stored in its vault and are “absolutely not virtual goods or digital sneakers” as claimed by Nike.
StockX says it was only using NFTs to authenticate its physical shoes and not selling them as standalone products. He explained that NFTs essentially facilitated the exchange of trainers stored in the vault. StockX believes Vault NFTs save customers time and money while reducing the environmental impact of repeat shipments.
StockX’s answer raises some interesting questions about how NFTs are classified – whether as (1) a ticket to describe ownership, or (2) a digital asset in their own right. How the Court decides to handle this case could have significant implications, particularly for those who use NFTs to record ownership of assets (such as fine art).
In Vogue Business, Jeff Trexler of the Fashion Law Institute comments, “Is the NFT simply, as StockX claims, a means of identifying a product, or is it a product that has value on its own? Is it a name or a photo in an advertisement or is it, as the response brief indicates, a use that adds value by assuring a buyer that the goods are genuine?Would the analysis be different if StockX merely sold the product with a mention of the NFT rather than presenting the NFT?